CS-54 Finance & Accounting On Computed June- 2001
Q.2(a). Anil invested Rs. 40,000 of his own in a florist shop and borrowed another Rs. 20,000 from bank for business use. At the end of first year of operations, he found Rs. 72,000 in his shop’s bank account. He owed his suppliers Rs. 12.000 and had not repaid the bank loan. He had no other business assets other than cash. During the year he paid himself a salary of Rs. 24,000.
(i) What conclusion would you draw from his first year’s operations?
(ii)"For what decision could this information be used?
(b) From the following data:
Selling Price Rs. 40 per unit
Variable manufacturing cost Rs. 20 per unit
Variable selling cost Rs. 10 per unit
Fixed factory overheads Rs. 10,00,000 per year
Fixed selling costs Rs. 4,00,000 per year
Calculate:
(i) Break-even point expressed in rupee sales.
(ii) Number of units that must be sold to earn a profit of Rs. 2,00,000 per year.
